MW: Dollar gains as Japan complains about yen strength
LONDON (MarketWatch) -- The U.S. dollar gained ground versus major rivals Tuesday, edging up versus the Japanese currency after the nation's finance minister hinted at the possibility of intervention to arrest the yen's rise.
The dollar was slightly higher versus most other major rivals as well, finding support as European equities and U.S. stock index futures lost ground.
Japanese Finance Minister Hirohisa Fujii on Tuesday described the yen's rise as "a little too sharp," Dow Jones Newswires reported, citing Kyodo News Agency. "We could take various steps if the (yen) reaches abnormal levels."
The remarks marked the second straight day Fujii has made remarks aimed at undoing market perceptions the new Japanese government was comfortable with a rising yen.
One U.S. dollar bought 89.96 yen, up slightly from 89.62 yen in North American trade late Monday but off from an earlier high above 90.10 yen.
The dollar index (DXY 77.16, +0.11, +0.14%) , a measure of the greenback against a trade-weighted basket of currencies, rose to 77.111 from 76.904.
"After yesterday's choppy start to trade for currency markets, a degree of reversion is now being seen with many of the major pairs slipping back from their recent moves," said David Jones, chief market strategist at IG Index. "Dollar/yen is settling around the 90 yen level as traders buy back into the safety of the dollar -- yields may be low, but they aren't set to head any higher soon elsewhere either."
The British pound, however, posted a strong rebound versus the dollar and other currencies after the Confederation of British Industry's measure of retail-sales activity rose to its highest level in five months.
The monthly distributive trades survey's retail sales balance rose to 3 from -16 in August, far exceeding forecasts for a rise to -13.
Meanwhile, a Bank of England seminar with prominent City economists signaled no shifts in policy. Reports said BOE officials made clear there were no plans for an imminent change to the deposit rate the central bank pays on deposits held at the BOE by commercial banks.
The pound traded at $1.5953, up from $1.5876. The euro fell 0.9% versus sterling to 91.16 pence.
A cut in the rate would effectively penalize banks for holding excess reserves at the BOE, pushing them to move the reserves into other assets and potentially enhancing the impact of the central bank's quantitative-easing program, which aims to boost the money supply and raise nominal spending.
Earlier, M4 money data showed weak growth in some key money-supply measures, adding to speculation the central bank could move to take additional steps in coming months. See full story.
The euro slipped to $1.4544, down from $1.4617 late Monday.
